Archive for September 2010

After ordering drastic ‘austerity’ programmes in Hungary, Romania, Greece, Spain and Portugal, pressure is now being increased on other countries to significantly reduce the living standards of broad social layers. This is what ‘austerity’ in the EU, and particularly western Europe, actually means. It does not mean the ruling parties and their agencies do with smaller salaries. It means that the massive deficits in public finances resulting from the economic crisis and bank bailouts be countered by slashing wages and social spending.

The German government, acting on behalf of the German export industry, is calling the tune for western EU. This spells continuing trouble for Europe’s working classes for it has been clear for several years that the ruling coalition in Berlin is acting in concert with the most powerful European financial and business circles, in particular the German export industry which claims to have led Germany into a new phase of ‘growth’.

There is no lack of voices saying these policies are short-sighted. On Monday, four leading European economists warned in the Financial Times that such harsh measures were “necessary but risky”. They threaten to trigger a depression affecting the whole eurozone. The resulting economic, financial and social stresses could destroy the eurozone. They suggested, therefore, a European solution: the European Financial Stability Facility established in the spring should become a permanent instrument that can be used to support highly indebted countries.

But this week Europeans marched on the streets in protest against the impacts of ‘austerity’. Up to 100,000 took part in a march on Wednesday on the European Union buildings in Brussels, Belgium, organised by the European Trade Union Confederation (ETUC), reported the World Socialist Web Site (WSWS). The march in the Belgian capital was the official centre-piece of Europe-wide demonstrations against austerity and cuts, though a general strike in Spain was by far the most significant expression of workers rising anger at the attack on their livelihoods.

Nearly 70% of Spanish workers — 10 million — took part in Wednesday’s general strike. In some sectors, such as mining, metal, auto manufacture, electronic, fishing and other industries, participation was nearly total. The movement also encompassed many self-employed workers and small businesses. Although the government tried to downplay the effects of the strike, the national grid operator Red Electrica Corp. said that electricity consumption was down by 20%.

The strike dealt a blow to business leaders, politicians and the media who claimed it would not be well supported. But without the minimum service levels agreed by the unions, which allowed the government and local authorities to determine how many airplanes, trains and buses had to be provided, the country would have ground to a complete halt.

Greece’s main union federations, representing about 2.5 million workers, did not strike on Wednesday and only organised a march to parliament in the evening. Only a few of the smaller unions called strike action, with hospital doctors stopping work for 24 hours. There was strike action by bus and trolley drivers for several hours and the Athens’ metro system and trams were shut down for a period at noon.

A demonstrator reacts after being hit by anti-riot police in central Barcelona during the general strike held in Spain. (Guardian) Photograph: Josep Lago/AFP/Getty Images

In Ireland, there were rallies hundreds strong in Belfast and Derry. A man drove a cement mixer covered with anti-bank slogans into the gates of the Irish parliament in Dublin to protest the bailout of the banks. In Portugal, there were protests in Lisbon and Porto. According to trade unions sources some 20,000 people took part in the evening demonstration in Lisbon.

Most of the other protests were in eastern Europe. In Poland, thousands marched in Warsaw against government plans to freeze wages and raise some taxes. They demanded the government guarantee job security and scrap plans to raise taxes. In Lithuania, some 400 protesters held an illegal demonstration in Vilnius. In Slovenia, around half of all public service workers continued a third day of an indefinite strike to protest at the government’s plan to freeze salaries for two years.

The Guardian reported that in Portugal, unions said 50,000 protesters joined a march in Lisbon and 20,000 in Porto. “It’s a crucial day for Europe,” said John Monks, general secretary of the European Trades Union Confederation, which orchestrated the events. “This is the start of the fight, not the end. That our voice be heard is our major demand today – against austerity and for jobs and growth. There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets. You’ve really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession.”

In Brussels marchers from across Europe waved union flags and carried banners saying “No to austerity” and “Priority to jobs and growth”, bringing parts of the city to a halt. The protest was led by a group dressed in black suits and masks and carrying umbrellas and briefcases to represent financial speculators, acting as the head of a funeral cortege mourning the death of Europe.

In late August we had a discussion to talk about the ways in which the ‘suppressed entitlement’ of Goa’s population, in relation to mining profits, could be freed. This would have the effect of galvanising a sense of right and ownership using the admittedly troublesome monetary incentive route (we will find a way to deal with this).

The concentration of wealth is astonishing, even in a region that is part of a country whose state Gini coefficients for income are well over 0.45 (over 0.30 is considered to be potentially socially destabilising). Goa’s top six iron ore mining families together with India’s largest private sector iron ore exporter have amassed immense wealth. Based on the derived industry profit for 2009-10, the share per resident family is Rs 3.19 lakh (not including profits from illegal ore sale, not subtracting for the ‘producer’s share of risk and managerial input’).

Based on time-series profits for the years 2000-01 to 2009-10 and average per ton prices we can ‘entitle’ the 360,000 resident families to their ‘withheld shares’ as follows: Rs 2.80 lakh in 2008-09, and working backwards Rs 2.50 lakh, Rs 2.15 lakh, Rs 1.80 lakh, Rs 1.45 lakh, Rs 1.10 lakh, Rs 76,000, Rs 40,000 and Rs 28,000. This totals close to Rs 16.5 lakh due per family for a decade of mineral exploitation. That’s one aspect, to place in perspective the stratospheric super-profits of the main mining families (companies). The other is to work towards a ‘true cost’ accounting of the extraction.

Rice is still planted and harvested in the coastal talukas, but fields such as these are threatened by urbanisation

The startling per family ‘entitlement’ also raises the question of how they have been used by the state of Goa. The indications from the contribution of mining and quarrying (the basic accounting head) in the Goa state accounts is that this has contributed between 6% and 4% of state domestic product. We may raise this contribution by 2% to include mineral extraction activities not covered directly by this head. Even so, where is the gross capital formation rate at the state level to show how this wealth has been used? Where is the rise in the net savings rate to show how this wealth has been retained? These are serious questions for the state government to answer.

A ‘true cost’ accounting of the extraction will help us achieve two things:

1. It will help fix the liability of the state administration towards the costs of ecosystem loss and degradation caused by mineral extraction.

2. It will similarly ‘spread the liability’ on a per family basis so that an economic disincentive is created at the household level for such an activity (mining) if households shared both profit and liability.

How are the populations of the 11 talukas (populations in the note below) to benefit from their share of ‘entitlements’ and ‘liabilities’ of the export profits and environmental burden of iron ore mining? To what extent must the state administration bear the liability and underwrite the costs of mitigation for all of Goa’s affected (directly and indirectly) families? How can participatory shares and fund instruments be created that embody these concepts, who will regulate them, how will they be counter-guaranteed? These are the community economics questions that will face us when we make such calculations.

As winter sets in, IDPs huddle around a small fire at a camp in northwest Pakistan. Photo: Abdul Majeed Goraya/IRIN

From late July through August, Pakistan received excessive monsoon rainfall across the country including many of the major rice and cotton growing areas. The extraordinary rainfall triggered severe overland and river flooding. The impact of the floodwater is most severe in Khyber Pakhtunkhwa (NWFP), Baluchistan, Punjab, and the northern districts of Sindh. These provinces have suffered significant loss of cropland and damage to agricultural infrastructure. The major kharif season (June-November) crops are rice and cotton, but a substantial amount of corn, millet, and sorghum is grown during the kharif season as well.

The floodwaters are receding in the mid- and upper-reaches of the Indus Valley but continue to expand in the southern district of Sindh. The final extent of the floodwaters and the resulting damage to crops is still uncertain. The USDA has made a preliminary assessment, based primarily on satellite imagery, which indicates significant crop damage in major rice and cotton areas along the Indus River in Punjab and Sindh provinces.

The USDA forecasts 2010-11 Pakistan rice production at 5.3 million tons, down 19 percent from last month, and down 1.5 million or 22 percent from last year. Area is estimated at 2.4 million hectares, 14 percent down from last month, and down 0.4 million or 14 percent from last year. Yield is forecast at 3.31 tons per hectare, down 5 percent from last month and down 9 percent from last year. USDA damage estimates, based primarily on satellite imagery, indicate rice cropland losses of 400,000 hectares. The rice crop is at various development stages ranging from the early vegetative to the reproductive stage. Satellite-derived vegetative indices indicate that upland cropping areas will benefit from abundant soil moisture, where flooding did not occur.

Cotton production is forecast at 9.3 million 480-pound bales, down approximately 2 percent from last month, and down 0.3 million or 3 percent from last year. Area is estimated at 3.0 million hectares, 2 percent down from last month, and the same as last year. Yield is forecast at 675 kilograms per hectare, down 0.4 percent from last month and down 3 percent from last year. Analysis of satellite imagery suggests cotton cropland losses at around 200,000 hectares. The crop is at various development stages ranging from early vegetative to advanced maturity, and vegetative indices indicate that most upland cropping areas, away from the flooded areas, benefited from abundant soil moisture profiles.

Continuing a trend that began earlier in the year, La Niña conditions strengthened through the summer of 2010, evidenced by a streak of cool water across the equatorial Pacific Ocean. This map reveals a broad swath of cool water stretching from South America to New Guinea. The ocean is not, however, uniformly cool. Pockets of warm water are mixed with the cool, particularly in the western Pacific. Warmer waters in this region can lead to increased rainfall, and La Niña conditions may have played a role in the devastating floods in Pakistan during the Northern Hemisphere summer of 2010. Over the eastern Pacific Ocean, cooler waters lead to less moisture along the coasts of North and South America. So as more rain pounds some parts of the globe, La Niña conditions can deepen drought in others. NASA Earth Observatory

The International Grains Council released its monthly Grain Market Report on 2010 September 23. In this report the IGC said that global grain prices advanced again in September, those for wheat having returned to the peaks reached in early August. While the initial trigger for the steep upturn in wheat and barley values in recent months was the fast deteriorating outlook for these crops in the Black Sea region, much of the more recent bullishness is attributed to concerns about smaller than anticipated US maize (corn) yields, as well as substantial new grain buying activity by importers.

The market commentary of the report said: “Another feature is the difficult harvest weather in some countries, affecting milling wheat and malting barley quality. US soyabean prices partly mirrored the upturn in maize, but were also supported by concerns about South American crop prospects and continued heavy buying by China. Asian rice prices moved higher, largely because of the impact of the flood emergency in Pakistan. The recent surge in world grain prices, while not on the same scale as in 2007-08, again prompted concerns about its impact on global food prices as well as the increased volatility in the major commodity exchanges. One measure of such volatility is the day-to-day change in futures values which, even allowing for the events of three years ago, is significantly greater than earlier in the decade. Given the generally adequate supply situation for wheat and other grains, despite recent crop concerns, many have expressed surprise at the ferocity of recent market responses.”

Grains outlook for 2010-11 – This year’s sharply reduced crops in the CIS and Europe will contribute to a fall of 1.2% in global grain supplies, reversing three successive years of stock building. World production in 2010-11 is forecast at 1,741m. tons, (1,787m.), 4m. below the previous month’s projection. This follows downward revisions, for maize in the US and wheat in the CIS region, more than offsetting improved prospects in Australia. Significant reductions in wheat and barley output will outweigh another rise in maize, although prospects for the latter crop are downgraded slightly. The difficult growing and harvesting conditions in parts of North America, Europe and the CIS have affected supplies of high-quality milling wheat and malting barley.

Grain consumption in 2010-11 is projected to increase by 0.6%, to 1,780m. tons, but this represents a marked slowing compared with previous years as the overall rate of expansion in industrial use, especially for ethanol in the US, is scaled back. In the animal feed sector, maize use is expected to be boosted, while that of wheat will likely hold steady, but this will be more than offset by reductions in barley and other grains. With global grains consumption expected to exceed output after three surplus years, global carryover stocks in 2010-11 are projected to fall by 39m. tons, to 353m., mostly because of declines in the world’s exporters, notably Russia and the US. However, the total carryover will remain significantly above the lows seen earlier in the past decade.

International Grains Council wheat and maize export prices

Global trade in grains is expected to fall in 2010-11, mainly because of reduced wheat shipments. At 237m. tons (239m.), the total is 5m. above the August forecast, following upward revisions for the EU, Russia and sub-Saharan Africa. Export forecasts for several countries, including Australia, Canada and the US, have been lifted, with total availabilities still seen as ample in a year which will see a huge shift in trade away from the drought-afflicted Black Sea region. In all, wheat and coarse grains shipments from Kazakhstan, Russia and Ukraine will fall by 27m. tons compared with 2009-10, with around half of this shortfall likely to be sourced in the United States.

The US Department of Agriculture’s ‘Grain: World Markets and Trade’ September 2010 report is also out. It noted wheat trade changes in 2010-11 in this way:

Selected Exporters: Australia is down 500,000 tons to 15.5 million based on logistical constraints. Canada is boosted 2.0 million tons to 17.5 million due to larger exportable supplies. EU is lowered 3.0 million tons to 21.0 million on reduced exportable supplies and quality concerns, particularly for German wheat. Iran is raised 450,000 tons to 500,000 due to greater exportable supplies and opportunities opened by reduced supplies in Russia. Kazakhstan is up 500,000 tons to 6.5 million on higher Russian import demand. Russia is raised 500,000 tons to 3.5 million based on exports shipped before the ban. United States is boosted 1.0 million tons to 34.0 million on strong demand, particularly for higher quality wheat.

International Grains Council rice and soyabean export prices

Selected Importers: Nigeria is up 400,000 tons to 4.0 million due to expected consumption growth. Russia is raised 1.4 million tons to 2.0 million due to increased demand for milling wheat caused by drought-reduced production.

The USDA report recorded trade changes in 2009-10 as “large late-season adjustments reflect reported shipments”. These are – Selected Exporters: Canada is up 500,000 tons to 19.0 million. The United Arab Emirates is raised 450,000 tons to 950,000. Selected Importers: Indonesia is down 450,000 tons to 5.4 million. Iran is up 600,000 tons to 3.6 million. Turkey is lowered 300,000 tons to 3.2 million.

Rice world markets and trade – Despite weather problems in China and Pakistan, global crop prospects remain excellent said the USDA report. Record world production is expected to not only meet rising demand but also maintain global stocks at the highest level since 2004.

International Grains Council world grain estimates

Prices – though quotes from all origins are up somewhat from last month, Vietnam’s increase is the most dramatic. With 2010 contracts already at a record 6.2 million tons, Vietnam raised the minimum export price of 5% broken to $450 per ton FOB, essentially halting new sales and, for the first time, pushing above higher-quality U.S. #2/4 quotes ($445 per ton FOB). Vietnamese quotes are now only $30 below Thai 100B quotes, a stark departure from the $120 spread just 2 months ago. As sales stall in Vietnam, Thai sales are expected to increase as the government finally releases intervention stocks. U.S. long-grain sales are also expected to pick up on newfound competitiveness and a record crop. By contrast, the medium-grain trade is somewhat on hold as the California crop has yet to be harvested. In addition, many tenders in major markets have yet to be announced.

The USDA report forecast trade changes for 2011. These are – Pakistan’s exports are slashed 750,000 tons to 2.9 million as floods have reduced the crop and damaged infrastructure. Afghanistan’s imports are reduced 100,000 tons to 200,000, as Pakistan is by far the largest supplier due to proximity and relative prices. Iran’s imports are cut 300,000 tons to 1.2 million on the expectation that imports from Pakistan will fall. Thailand’s exports are down 500,000 tons to 9.0 million because the government stock release is happening much later in the year than originally anticipated. Vietnam’s exports are raised 450,000 tons to a record 6.2 million on contracts to date. By contrast, imports are dropped 100,000 tons to 400,000 on a slowdown of border trade with Cambodia. Indonesia’s imports are doubled to 500,000 tons as relatively high domestic prices have caused a surge in trade with neighboring countries. Iran’s imports are dropped 150,000 tons to 1.2 million on the pace of shipments. Nigeria’s imports are lowered 100,000 tons to 1.7 million on slower-than-expected imports from Thailand.

The FAO’s Committee on Commodity Problems has just concluded its Extraordinary Joint Intersessional Meeting of the Intergovernmental Group on Grains and the Intergovernmental Group on Rice (held in Rome, 24 September 2010). The Food and Agriculture Organization of the UN does not, it appears, want to cause any alarm bells to be rung in countries already worried by food inflation, and that is why its overall advise is at odds with the details highlighted during the day-long consultations.

Here are the main points of an advisory titled ‘Turmoil in Global Cereal Markets: Outlook for 2010-11, Short-Term Risks & Uncertainties’:

La Nina (colder-than-normal sea-surface temperatures in the Pacific Ocean) often results in drier periods in Argentina and southern Brazil but wetter weather in Asia. It may strengthen through January
Any downgrading of wheat crops in southern hemisphere countries before harvest this year- Western Australia not so good
The final maize harvest in the USA (and China) – production may end up lower
Adverse growing conditions affecting secondary rice crops in Asia and main crops in southern hemisphere
Drought in Russia and delayed winter grain sowing (down 20%) – but some rains have arrived
Crop damage in Pakistan: implications for next season
Faster/slower economic recovery influencing demand prospects for feed and fuel: tightening maize supplies in the US if demand for ethanol rise faster than predicted
Larger than currently expected import purchases, maize by China for example
Trade measures, in particular further exports restrictions
Developments in outside markets such as currency (US Dollar), equity, energy and other commodity markets

UN Millennium Development Goals Report 2010 / UNICEF Photo

The rhetorical question is asked – “Are we ready?” – and the points supplied are: (1) We are not in a food crisis and grain prices may even come down a bit, (2) But all indications point to still high prices and volatile markets with many uncertainties lying ahead, (3) Food security under growing market instability and price volatility: Are we ready?

The extraordinary joint meeting briefly explained what it meant by “Increased volatility & speculation” with the following points: Markets liberalisation, decline of price supports; Deregulation of the financial service sectorl Declining margins in securities tradingl Rising demand for food in emerging marketsl Under-investment in agriculture; Lack of price transmission to producers; Sudden governmental interventions in export marketl Ease of access to electronic market place; Exchanges restructured today as for-profit corporations.

The dangers, current and expected, are set out in the briefing paper on ‘Agricultural Futures: Strengthening market signals for global price discovery’. This said:

Volatility in commodity foodstuffs is a result of both fundamental factors and speculative inflows of managed money. Sharply differing opinions exist on how institutional money flows have changed the nature of the markets, particularly since the expansion of limits. While financial firms argue that they add volume and liquidity to the market, others maintain that large order size creates volatility and jagged price swings. In the August 2010 price hike of wheat, the CME wheat price moved up limit and down limit within two consecutive days. High frequency trading is also a controversial issue – one that a CFTC editorial recently stated needed “reining in,” commenting that “parasitical trading does not truly contribute to fundamental market functions.”

Much debated also is the effect of passive fund money (index funds and swaps dealers), with experts on both sides arguing whether they have caused chronic price elevation and steep contango in some futures contracts. In its 2009 Trade and Development Report, UNCTAD contends that the massive inflow of fund money has caused commodity futures markets to fail the “efficient market” hypothesis, since the purchase and sale of commodity futures by swap dealers and index funds is entirely unrelated to market supply and demand fundamentals, but depends rather on the funds’ ability to attract subscribers. Despite the risk transfer nature of futures trading, in which gains and losses are equally offset, passive funds have successfully packaged and sold futures contracts as an alternative investment class to institutional investors. However, most would agree that these passive funds do not affect volatility levels since their only trading activity is a forward “roll” of their positions and the timings of these rolls are announced in their prospectus.

This is worrying because the FAO is now being a great deal clearer about the same problem it tried to describe in 2007-08,

1. Given the numerous linkages between agriculture, oil, and other financial markets demonstrated above, comprehensive reform of all derivatives trading is necessary. The very first step would be to require registration, as well as clearing to the maximum extent possible of OTC derivatives, so that there is real time reporting of all transactions made, without information privileges for OTC traders, and in order to allow for effective supervision. The small minority of derivatives that cannot be cleared must nevertheless be reported without a time lag.

Islamabad Water Carrier: World Water Day was just another Monday for Nasir Ali, who was photographed on March 22 hauling water to his home in an Islamabad slum. Water shortages have become common for many people in the capital who must gather their daily water from government tankers or private trucks—when the precious resource is available at all. The nation’s acute rainfall shortage has also cut water supplies at hydroelectric dams, exacerbating disruptive power shortages and forcing officials to implement some rather dramatic solutions. Photograph by Aamir Qureshi, AFP/Getty Images

2. Regulatory bodies should carefully study and acquire expertise in commodity markets, instead of regulating commodity derivatives and financial derivatives as if they were the same class of assets. It may be appropriate to assign the task of regulating commodity derivatives to a specific institution staffed with experts in commodity regulation, rather than have a single body regulating both financial and commodity derivatives.

3. Access to commodities futures markets should be restricted as far as possible to qualified and knowledgeable investors and traders who are genuinely concerned about the underlying agricultural commodities. A significant contributory cause of the price spike was speculation by institutional investors who did not have any expertise or interest in agricultural commodities, and who invested in commodities index funds because other financial markets had dried up, or in order to hedge speculative bets made on those markets.

4. Spot markets should be strengthened in order to reduce the uncertainty about future prices that creates the need for speculation. However, these markets must also be regulated in order to prevent hoarding. Spot markets must be transparent, and holdings should be subject to strict limits in order to prevent market manipulation.

5. Physical grain reserves should be established for the purpose of countering extreme fluctuations in food price, managing risk in agricultural derivatives contracts, and discouraging excess speculation, as well as meeting emergency needs. Such measures and the abovementioned reform of commodity derivatives markets should be seen as complementary.

Data from the Multi-angle Imaging Spectroradiometer (MISR) instrument on NASA’s Terra spacecraft have been used in a new study that examines the concentration, distribution and composition of aerosol pollution over the Indian subcontinent. The study documents the region’s very high levels of natural and human-produced pollutants, and uncovered surprising seasonal shifts in the source of the pollution.

Larry Di Girolamo and postdoctoral scientist Sagnik Dey of the University of Illinois, used a decade’s worth of MISR data to comprehensively analyse aerosol pollution over the Indian subcontinent. This densely populated region has poor air quality and lacks on-the-ground pollution monitoring sites. The study was published recently in the Journal of Geophysical Research.

The NASA report said that aerosols — tiny particles suspended in the air — are produced both by natural sources, such as dust and pollen carried on the wind, and by human activities, such as soot and other hydrocarbons released from the burning of fossil fuels. They can affect the environment and human health, causing a range of respiratory problems. Aerosol pollution levels can be measured on the ground, but only the most developed countries have widespread sensor data.

Since standard satellite imaging cannot measure aerosols over land, Di Girolamo and Dey used NASA’s MISR, developed and managed by NASA’s Jet Propulsion Laboratory. MISR’s unique multi-view design allows researchers to differentiate surface variability from the atmosphere so they can observe and quantitatively measure particles in the air. MISR not only measures the amount of aerosols, but can also distinguish between natural and human-produced particles.

The scientists found very high levels of both natural and human-produced aerosol pollutants. The level of atmospheric pollution across most of the country was two to five times higher than World Health Organization guidelines.

But the study also revealed some surprising trends. For example, the researchers noticed consistent seasonal shifts in human-produced versus natural aerosols. Before monsoon season begins, the winds over the Indian subcontinent shift, blowing inland instead of out to sea. These winds carry immense amounts of dust from Africa and the Arabian Peninsula to India, degrading air quality.

“Just before the rains come, the air gets really polluted, and for a long time everyone blamed the dust,” Di Girolamo said, “but MISR has shown that not only is there an influx of dust, there’s also a massive buildup of man-made pollutants that’s hidden within the dust.”

During monsoon season, rains wash some of the dust and soot from the air, but other human-produced pollutants continue to build up. After monsoon season, dust transport is reduced, but human-produced pollutant levels skyrocket, as biomass burning and the use of diesel-fueled transportation soar. During winter, seaward-blowing breezes disperse all the pollutants across the subcontinent and out to sea, where they remain until the pre-monsoon winds blow again.

“We desperately needed these observations to help validate our atmospheric models,” said Di Girolamo. “We’re finding that in a complex area like India, we have a long way to go. But these observations help give us some guidance.”

As MISR continues to collect worldwide aerosol data, Di Girolamo says atmospheric scientists will continue to refine models for India and other areas and begin to propose new regulatory measures. The MISR data may also reveal trends in aerosol concentration over time, which can be compared with climate and health data.

The images represent MISR data used to measure the concentration of aerosol pollutants over the Indian subcontinent and how it varies by season. The most polluted areas are depicted in red. Image credits: NASA/JPL-Caltech/University of Illinois.

The US Department of Agriculture’sWorld Agricultural Supply and Demand Estimates (Wasde) report is out, dated 10 September 2010. Here are the highlights of its analysis on global wheat and rice.

Wheat

Global wheat supplies for 2010-11 are projected down 0.7 million tons as higher carry-in mostly offsets a 2.7-million-ton reduction in world output. Much of the offset is explained by Canada, where beginning stocks are increased 1.5 million tons, as reported by Statistics Canada, and production is increased by 2.0 million tons. These changes mostly offset lower production in Russia and the European Union (EU) 27. Production for Russia is lowered 2.5 million tons based on the latest harvest results for the drought-affected central growing areas in the Volga and Urals Federal Districts. EU-27 production is lowered 2.4 million tons with the largest reductions for Hungary and Romania where heavy summer rains reduced yields. Smaller reductions in a number of other member countries also reduce EU-27 production. Although the reduction for Germany is small, persistent and heavy August rains have reduced supplies of high quality milling wheat. Other production changes include a 0.3-million-ton reduction for Belarus and a 0.4-million-ton increase for Morocco.

World wheat trade for 2010-11 is raised with global exports projected 1.4 million tons higher. Export shifts among countries largely reflect availability of supplies and increased competition from North America. Exports are raised 2.0 million tons for Canada and 1.4 million tons for the United States. Exports are also raised 0.5 million tons each for Iran and Kazakhstan. A 0.5-million-ton increase in Russia exports reflects larger-than-expected shipments during early August, before implementation of the export ban on August 15. These increases more than offset a 3.0-million-ton reduction for EU-27 and a 0.5-million-ton reduction for Australia. EU-27 exports are lowered with reduced supplies and increased competition from Canada. Logistical constraints are expected to limit exports from Australia.

World wheat imports for 2010-11 are raised with increases for Russia and Nigeria. Imports for Russia are raised 1.4 million tons as imports from regional suppliers support domestic usage, particularly for feeding. World wheat consumption is lowered 3.8 million tons with lower consumption in EU-27, Russia, and Kazakhstan outweighing increases for Pakistan, Canada, and Nigeria. Wheat feeding is lowered 2.0 million tons for EU-27 with imported coarse grains expected to partly replace wheat in livestock and poultry rations. Global ending stocks are projected 3.0 million tons higher with increases for EU-27, Canada, and Australia. Ending stocks are lowered for Pakistan and Russia.

Rice

Projected global 2010-11 rice supplies and use are both lowered from last month. Global rice production is projected at a record 454.6 million tons, down 4.6 million tons from last month’s estimate, mainly due to large declines for several countries including China, Indonesia, and Pakistan.

China’s 2010-11 rice crop is reduced 1.5 million tons to 136.0 million, due mainly to a decrease in the early rice crop. Both area and yield are reduced by early season drought in some areas combined with late-season flooding in other areas. Indonesia’s 2010-11 rice crop is reduced 2.0 million tons to 38.0 million, based in part on a report from the U.S. Agricultural Counselor in Jakarta. Indonesia’s 2009-10 rice crop is also reduced – a reduction of 1.7 million tons to 37.1 million. Indonesia’s yield growth has stagnated due to weather, pests, and disease problems. Pakistan’s 2010-11 rice crop is reduced by 1.2 million tons or 18 percent to 5.3 million as severe flooding lowered both area and average yield.

Global 2010-11 exports are reduced by 0.6 million tons to 31.0 million, mainly due to a reduction for Pakistan. Global consumption is lowered by nearly 2.3 million tons, mainly due to decreases for China (-0.5 million) and Indonesia (-1.35 million). Global ending stocks for 2010-11 are projected at 94.6 million tons, down 3.0 million from last month, but up slightly from 2009-10. Stocks are lowered for China, Indonesia, Vietnam, and Iran, and raised for the United States.

The excellent monthly journal from Kathmandu, Himal Southasian, had some years ago invested much time and some money to create a “right side up” map of the Southasia region. (Himal spells it that way, one word.) In this map, Sri Lanka is at the top, India spreads out below it, like a large triangle, the water bodies of the Bay of Bengal and the Arabian Sea (or the mer d’Oman, as the French have long called it) are to the left and right respectively.

The delta of the Ganga-Meghna-Brahmaputra empties upwards, and so does that of the Indus. India’s major peninsular rivers flow from right to left (and not the other way around). The terai and Nepal are to be found towards the bottom of the map, where the topographical artwork shows the high Himalaya, Hindu Kush and Karakoram. Right at the bottom of the map are Tibet and China.

Now, several years after it first drew surprised comment and made waves in international conferences and media, the Himal map has been used as inspiration by a mainstream weekly, The Economist. (Actually, the Economist is right-wing and transatlantic, not worth subscribing to but useful as a borrowed read to learn what the globalisation crew are plotting next.)

The illustration accompanying this comment is a map of South America right-side-up, Himal style – Argentina and Chile at the top of the continental triangle, Brazil to the left, the USA and Canada at the bottom. Of course the Economist has used only country outlines and names, not the painstaking rewriting of several hundred towns, cities and natural features which is what makes the Himal right-side-up map remarkable. Still, it’s a start.

A finding of great importance was released this week, of the number of people living in poverty in the United States of America (USA). The data was released by the US Census Bureau, which is carrying out the 2010 census of the USA.

The message is a stark indicator of the acute ill-health of the current global economic system and needs to be treated as such. The number of people living in poverty in the USA rose to 43.6 million in 2009 – this is the largest number since the agency began making such estimates 50 years ago and represents an increase of 3.8 million compared to 2008. As of last year, one in every seven Americans was poor, according to the government’s definition of poverty. The official poverty rate of 14.3% is the highest since 1994.

Handicapped man begging at a traffic light, Los Angeles

The poverty rate jumped more than a full percentage point, from 13.2% in 2008. There were 8.8 million families living in poverty in 2009, including one child in every five. This is the same rate of child poverty that existed nearly five decades ago, when President Lyndon Johnson announced his “War on Poverty”. With this data, the government of the USA is advised to cease and call off all the other wars it is waging and renew the war on poverty within its own boundaries.

Reflecting the impact of the economic slump and mass layoffs and wage-cutting, the increase in poverty was concentrated among working-age adults and their children – the poverty rate for working-age adults rose from 11.9% to 12.7% percent, for children the poverty rate rose from 19.4% to 20.7%, and the poverty rate for those 65 and older fell from 9.7% to 8.9%.

The new figures on poverty in the USA have powerfully shown that what passes for contemporary economic theory, such as the efficient markets hypothesis, has nothing whatsoever to do with human development. The ‘efficiency’ of markets are a direct expression of the needs of finance capital which has assumed such a powerful role in the world economy over the past three decades.

Why has such devious and destructive theory been turned into policy for so long? Because it serves definite financial interests. Because, without such hypotheses and the support given them by the system we call ‘globalisation’, most of the trading and risk models used by major financial institutions would have to be thrown out.. These figures from the USA – amplified a thousand times in the figures from less industrialised countries – show why the system is choking every species on the planet including our own.

The Economic Policy Institute commented: “For the first time on record, the nominal (non-inflation adjusted) income of the median, or typical, household actually fell, from $50,303 in 2008 to $49,777 in 2009. Inflation was negative from 2008 to 2009, dropping by 0.4%, so real (inflation-adjusted) income did slightly better. Real median income declined by $335 from $50,112 in 2008 to $49,777 in 2009, a decline of 0.7%. The real median income of working-age households declined even more, falling by $754 from $56,575 to $55,821. African Americans were hit particularly hard in 2009, with the median African American household income dropping by 4.4%.”

The retail price of fuel advertised at a petrol pump (gas station)

The EPI said the 4.7 million drop in the number of earners working full-time, full-year, was “particularly astonishing”. A disproportionate amount of this decline was among men — the number of men working full-time, full-year dropped by 3.8 million, while there was a 900,000 drop in the number of women working full-time, full-year. The job loss and hours reductions of 2009 meant there was a 3.7 million drop in the number of workers with any earnings at all in 2009, and a 1.1 million increase in the number of workers working part-time and/or part-year.

That’s not all, said the Urban Institute. “This 15-year high still understates the dire straits of many Americans today.” The current recession began in December 2007, and the unemployment rate doubled (from 5 to 10%) between December 2007 and December 2009. The Census poverty estimates are based on family income received during the 2009 calendar year. Since the unemployment rate rose during the year, the 2009 poverty rate understates deprivation at the end of the year.

(1) The emergency continues to unfold in the southernmost province of Sindh. Additional towns and villages in Dadu and Jamshoro districts have been flooded in recent days, as Manchar Lake breached its banks. (2) The health cluster warns of an increased risk of malaria, particularly in the south, in the coming days and weeks. (3) A fully revised floods response plan, the Floods Emergency Response Plan (FERP), will be launched in New York on 17 September by United Nations Under-Secretary-General and Emergency Relief Coordinator Valerie Amos. (4) Though 74% of the requirements set out in the Pakistan Initial Floods Emergency Response Plan (PIFERP) have now been covered, massively scaled up donor support will be needed to meet the increased requirements set out in the FERP.

“The country has suffered a loss of about Rs250 billion in the agricultural and livestock sectors and the flood recovery costs may run into billions of dollars, local experts and a UN spokesman said on Thursday. The Minister for Food and Agriculture, Nazar Mohammad Gondal, said: “It is difficult to give an exact figure, but I agree that the loss of agriculture and livestock runs into billions of rupees. The floods have destroyed crops of cotton, rice, sugarcane and tobacco worth billions of rupees.”

Javed Saleem, a former president of the Crops Protection Association (CPA), and Ibrahim Mughal, chairman of the Pakistan Agricultural Farms Association (PAFA), said over 17 million acres of agricultural land had been submerged and ripe crops of rice, cotton and sugarcane destroyed. Over 100,000 cows, buffaloes, goats, sheep, horses, camels and donkeys have been lost and 3,000 fish farms and 2,000 poultry farms destroyed across the country. “According to an estimate, the loss of cotton crop is of about Rs 155 billion,” Mr Saleem said.

Mohammad Rezwan, 24, swims one hour every other day to get food from at a World Food Programme distribution in Kashmore, Pakistan. Photo: IRIN News

In Punjab alone, a cotton growing area of about one million acres had been affected and crops worth Rs86 billion destroyed, he said. “The whole agricultural belt that includes Jhang, Bhakkar, Rajanpur, Rahimyar Khan and Layyah has been inundated.” Sindh has lost standing crops worth Rs 95 billion over 100,000 acres. Cotton and rice are the major crops destroyed by the floods. In Khyber Pakhtunkhwa, over 325,000 acres have been submerged and crops worth Rs 29.6 billion destroyed. Mr Mughal said over one million tons of wheat stock kept in houses had been swept away. “About 1,000 tractors have also been lost,” he said.

The Dawn report said: “According to dealers, the floods have caused a shortage of food items and the prices of fruits and vegetables have increased by 25 to 50 per cent. It is feared that the situation will persist for the whole year till cultivation resumes in flooded areas.”

What will the combination of ruinous losses and soaring prices to do people like Wali Jamote, 50, who fled his village in Nasirabad District early in August, as reported by IRIN News. “I lost everything we had – our tent, the few clothes, shoes and utensils we possess, and worse of all my goats and a camel,” Wali told IRIN. He and his family move every few months in search of fresh pasture: “The animals were all we had. They provided us with milk and cheese, and without them my children have gone hungry.” He said he had been given “no help at all” by any agency.

Thousands of people camped out along the main road from Quetta, capital of the southwestern Pakistani province of Balochistan, to Sukkur in Sindh Province, are living in primitive conditions, some with no shelter from the scorching sun. Among them are a particularly vulnerable group: nomads who have lost their livestock. Worse still, Wali and others like him have no idea what the future holds. “Will anyone give me a camel?” he asked. He also said he had no national identity card. “Some soldiers who passed by said I could receive no help without it – but they also said that with no fixed address I was not eligible for one.”

The International Crisis Group has advised that Pakistan’s government and international actors must ensure those in flood-devastated conflict zones are urgently granted the assistance they need to survive and to rebuild lives, without the military dictating rehabilitation and reconstruction efforts. Pakistan: The Worsening IDP Crisis, is the title of a new briefing on internally displaced persons from the International Crisis Group.

It highlights how the country not only faces an unprecedented natural disaster, but also confronts the twin challenges of stabilising a fragile democratic transition and countering violent extremism. The civilian government, already tackling an insurgency, and its institutions, neglected during nine years of military rule, lack the capacity and means to provide sufficient food, shelter, health and sanitation without international assistance. But all sides must ensure community-based civil society groups, credible secular non-governmental organisations, and elected representatives lead the process.